Phonographic Performance Ltd v JJPB Ltd & Anor

These two actions are brought by PPL against traders who have been playing music in public without the relevant licence. PPL is a collecting society which operates for the benefit of its members and enforces its members’ copyrights, distributing the royalties to the relevant rights holders.

In PPL v Gaughan, Mr Gaughan is the proprietor of a restaurant/bar called Watkin’s Folly in which music is played to the customers. PPL discovered that the bar was trading without a PPL licence. After correspondence which did not lead anywhere PPL brought these proceedings to enforce their rights seeking an injunction restraining Mr Gaughan from infringing. Those proceedings were issued on 28^th April 2016 and served. In early May 2016 Mr Gaughan telephoned PPL’s solicitors and confirmed he intended to obtain a licence and offered to pay the outstanding sum in instalments. A payment plan was agreed whereby the outstanding sums would be paid and payments began to be made by Mr Gaughan.

By 26^th November 2016 the then outstanding licence fees had been paid but by that time the question arose about licence fees for the next year – for the period 28^th November 2016 to 27^th November 2017. It was agreed between PPL and Mr Gaughan directly that he could pay those fees over a period of 4 months by direct debit alongside payments of the costs of the proceedings which remained unpaid. PPL’s policy is that it will not grant a formal licence in these circumstances until the costs are paid. Mr Gaughan made one payment of the sum for the period 2016/2017 but no direct debit was ever set up and despite promises to pay all remaining outstanding sums, Mr Gaughan has not done so. No formal licence was ever entered into. Watkin’s Folly continues to play sound recordings to the public without a licence from PPL.

PPL brought this application for judgment in default of acknowledgement of service and defence. Given the timing PPL also needed to seek permission to lift the automatic stay which applies six months of the period for filing a defence provided for by CPR rule 15.11(1). That application was made under r15.11(2). Given that the reason for the six month period having passed was the ongoing negotiations between PPL and Mr Gaughan, I made an order lifting the stay.

There is no question that the Defendant is in default and a default judgment would ordinarily follow. Normally these matters are dealt with briskly in the Chancery Applications Court.

The question is whether an injunction should be granted in these circumstances. Even on an application for judgment in default in which default judgment should be granted, the court still retains its discretion to be exercised in deciding whether or not to grant an injunction. No doubt an injunction would ordinarily be granted in the normal case but the issue is whether the fact that the Defendant has in fact paid for all the infringements which were extant at the date these proceedings were issued means that no injunction should be granted. It could be said that as at the date of the issue of the Claim Form, all the infringing acts on which the action was based have now been “franked”. PPL submit an injunction should be granted on the facts of this case because there is clear evidence that the acts complained of are continuing and since December 2016 they have been unlicensed.

The other action raises the same issue and came before me in the Applications list on the same day. The defendants are JJPB Ltd and Mr Batterton. The case relates to a cocktail club called Keystones which was playing music without a PPL licence. The claim form was issued on 31^st January 2017, served and no Acknowledgement of Service or Defence has been filed. The defendants are in default. There is no CPR r15.11 six month issue in this case. However as in the Watkin’s Folly case, the Defendants here have paid outstanding licence fees which cover the period up until the Claim Form was issued but the costs of the proceedings have not been paid for and no formal licence has been entered into. The premises are continuing to play music and are unlicensed. So again the acts of infringement which were relied on at the date of the Claim Form have now been paid for. Nevertheless the claimant contends that in these circumstances an injunction should be granted.

These two applications came before me on 16^th May 2017. At the hearing I indicated that I would grant an injunction in both cases but would give a short reasoned judgment explaining why since the issue is a matter of some importance to PPL.

The relevant principle is that an injunction is ordered to stop an infringement from happening in the future on the basis of the existence of a threat and intention to do just that.

On applications for judgment in default when an injunction is claimed the general approach is that the court simply has to confirm that the facts pleaded in the Particulars of Claim support the relief sought. In both of the cases the pleading pleads the existence of a threat and intention to infringe based on past unlicensed acts. I have considered whether one could simply take the approach that the pleading sets that out, and since that would provide a basis for an injunction, that is all that is required. In circumstances like this I do not believe that would be sufficient. It seems to me that it was obviously right that PPL should tell the court on these applications that the infringing activity up to the date of the claim form, which is what the Particulars of Claim were referring to, had been paid for by the defendant in both cases. It would be unreal for the court not to take that into account when deciding what to do.

Injunctions are almost always granted following proof of past infringements of intellectual property rights but it is always necessary to have in mind the point I have mentioned, that the injunction looks to the future and is based on a threat and intention by the Defendant to infringe. Generally the fact that a Defendant has infringed in the past will be sufficient evidence of a threat and intention to infringe in future but there can be cases where that is not so.

I consider the law on the “quia timet” nature of injunctions in Merck Sharp Dohme Corp v Teva[2013] EWHC 1958 (Pat) (see paragraphs 39-59). A problem which is similar but not identical problem faced by PPL here arose in Landor v Azure[2007] FSR 9. In that case the Defendant had given contractual undertakings not to infringe when the claim was commenced but the undertakings were later withdrawn and at trial the Judge granted an injunction. On appeal Neuberger LJ (as he then was) held that the Judge was entitled to grant the injunction in those circumstances. He said that the debate about whether there was no threat of infringement at the date of issue of the proceedings was an arid one and without merit. Neuberger LJ explained that the courts have tended to take a pragmatic case by case approach to these questions. Landor v Azure is different from the present circumstances but Neuberger LJ’s reasoning indicates that a narrow focus on the position as at the date of issue of the proceedings is not the whole story. It can be appropriate to take account of events which had taken place after the claim had been issued.

In my judgment that pragmatic approach applies to applications for default judgment just as much as to trials. In this case the fact is that the infringements on which the claim was brought have all been paid for. However subsequent events in both claims are relevant to the question of whether an injunction should be granted. Since in both cases the Defendants are continuing to infringe but have no licence it seems to me that it is right and appropriate for the court to grant an injunction on these applications for judgment in default.

The alternative would be to require the Claimant to issue fresh proceedings and make the same claim for an injunction in those proceedings that they now make on this application. That would elevate form over substance and would simply add to the costs of the Claimant and most likely the Defendants too since they would be likely to have to pay the costs of these proceedings. It would be wholly unnecessary.

For all those reasons in my judgment the appropriate thing to do in these circumstances is to grant the injunctions and that is what I will do.